Geared Up for Growth

In October, FundRaising Success held its fourth annual Virtual Conference & Expo, a daylong, online gathering that allowed fundraisers to listen to and interact with some of the industry’s most respected and innovative fundraisers. Our closing session was a panel discussion focusing on things nonprofits need to think about and do to grow and thrive in 2014 and beyond.

The session was moderated by Angie Moore, VP of strategy and development at Eleventy Marketing Group. Panelists included:

• Ellen Cobb Church, CEO of Craver, Mathews, Smith & Co.
• Marc Pitman, founder of FundraisingCoach.com
• Jeff Jowdy, founder and president of Lighthouse Counsel
• Kristin McCurry, principal at MINDset Direct
• Dane Grams, director of direct response at the Human Rights Campaign
• Jo Sullivan, then executive director at Save the Chimps

Here’s a transcript of the session:

Angie Moore: What we have today covers everything from getting new donors to retention, getting more people to do more things, how to grow, how to get more money … the sky’s the limit on this. Ellen, why don’t you kick us off on the concept of getting new donors as we move forward?

Ellen Cobb Church: The phrase that pays for the last few years has been retention, and rightly so. Retention needs to continue to be a key metric that we all pay attention to and strive to improve upon. But if we don’t have anyone to retain, we’re not going to thrive. So don’t cut acquisition. If you have cut it recently, please add it back now.

There are three channels that you should be looking into to acquire donors: Obviously, direct mail, but you need to mail smarter. Cooperative databases have been around a long time, and they’re gaining popularity every year in the nonprofit sector. They’re a great way to find new donors and expand your available universe. So talk to your list broker and find out which co-ops will work best for your organization, and keep on top of all the new ones that are coming onto the market. You should really be using co-ops in every merge.

Good customer matches are also key to making big files work. There’s plenty of opportunity to use those. They should be tested, along with ZIP files. And try new products. There is value to being on top of the newest products that are coming out there. Don’t be afraid to try new models, new products, new lists. And of course, along with the list plan that has you in a variety of markets, you need to be testing. And I’m not talking about tweaks to your creative. I mean test your message, test your package, test seasonality constantly. You should have multiple control packages and multiple list plans to go with those.

No. 2 is online. Creating targeted ads gives people a reason to click through. The most important part of that sentence was “gives people a reason to click through.” It doesn’t always mean give or donate. It could also mean offering them an inexpensive premium or a call to action that requires someone to give you their e-mail or their home address so you can immediately put them into your conversion program, which of course you will have ready to go before you run your first ad. And again, test. Test your ads, test their placement, test the call to action, test the landing page. Make sure your image or text is so compelling that when I look at it, I have to see more.

And then No. 3, of course, social media. Your social-media strategy should be well-thought-out and as planned and tested as every other part of your fundraising and communication plan. When you sit down to plan a fundraising strategy for a program or a campaign, everyone should ask themselves, “What do we want our community and their friends to share, like, tweet, post, pin, retweet, text, check in, forward, Digg, Reddit, upload, download, publish or in any other way participate with us on this campaign?”

The more you engage people, the more likely they are to become donors now or one day in the future. And if you have a teenager in your life, pay attention to what social-media outlets they abandon because “old people” are using it — that’s donors — and what ones they use the most because those “old people” will soon be migrating there.

AM: … There’s a strategy that’s been around for a very long time, that’s not new, but it just continues to evolve and continues to do better and better — and that’s the concept of sustained giving, monthly giving.

Dane, what are your thoughts on what people should be paying attention to, whether they’ve got a program or they’re thinking about launching a program?

Dane Grams: For those of you who know me, you know that I’m a big believer in monthly giving. I don’t know if that’s because I was schooled at Greenpeace and we always based our fundraising program on European models, or if I’ve just had enough experience to know that it works at this point. But I’d like to throw out there that not only is monthly giving important to the growth of an organization, I think in the future it’s going to be important to the survival of organizations. Why is that? Because monthly donors have a higher retention rate and a higher long-term value for the organization, and I’ve seen how monthly giving can impact overall budgets and growth.

At HRC, I started the monthly giving program, which we call “Partners,” in 1997. That first year we had about 2,000 monthly donors. Today the organization has 65,000 monthly donors, which represents more than $10 million in our gross income. It’s also our highest net income program. For us, that’s more than 10 percent of our overall donor file, and it represents 25 percent of our organization budget. The short-term investment that you put into a monthly giving program is absolutely worth the long-term net growth.

We bring in monthly donors through face-to-face canvassing, through our direct-marketing campaigns, through telemarketing, Web, e-mail. We convert people through a welcome series and through a variety of other channels. I would encourage people to start experimenting with monthly giving asks in all of their channels, and for organizations that are not advocacy organizations — they’re not 501(c)(4) organizations where size matters — I would also encourage people to experiment with a monthly giving primary ask or a monthly giving only ask approach because the relative impact for some organizations, while you do lose one-time support, that one-time support is often more expensive, and monthly giving would be more beneficial to your organization in the long run.

AM: [An attendee] wants to know how to easily track monthly giving for a small nonprofit.

DG: I would probably want to know a little more about their tracking mechanisms for their other donor income to see how they might adapt that for monthly giving. But if it’s a small and growing program, it can be done relatively easy. I’m sure whatever system that they currently have can be capable of it. If not, you could even set something up in Excel to monitor performance on a regular basis.

Kristin McCurry: The size of your organization should not be an impediment to you creating that program or to you tracking it. While it may limit the channels and the programs that you have access to build it and to add your base of sustaining donors, [being a smaller organization] shouldn’t be a barrier to you managing that program and growing the relationship with the donors that are in it.

AM: [Another attendee] wants to know if there is a monthly giving ask that is too small.

KM: It really depends on a couple of different factors. If the majority of your monthly donors are going to be giving by credit card, it is still very efficient to take gifts even as small as $5, because you know that those gifts are going to go through about 95 percent of the time. You have very low cost to manage the relationship. You’re not issuing a monthly statement, etc. And the likelihood that you’re going to get 12, or in some cases more, gifts out of those people in a year is very high.

AM: Perfect. Jeff, what’s your thought on this whole concept of what we should be doing in retaining donors and even outside the donor population, volunteers and other types of constituents?

Jeff Jowdy: The bottom line is to keep them. We know that retaining donors is less costly. We also know that people give more to where they’re involved and that long-time donors are more likely to consider a planned gift or an ultimate gift. So always be looking for opportunities not only for donor retention but to engage your donors, as volunteers, as advocates for your organization, no matter what your cause or what your geographic reach would be.

How do you get your donors to be advocates, to be involved with your organization? There are three basic things. We’ll oftentimes do interviews with board members of organizations we’re working with, and it’s amazing the number of even board members who aren’t being asked, aren’t being thanked and who aren’t being communicated with regularly. You have to ask regularly and thank regularly and communicate regularly.

AM: Continuing along that line of best practices … how do we do the things that we’ve always done, which we know work, but do them the best possible way?

Marc Pitman: … One of the things that we really get sidetracked by is the flashy, shiny object; it’s usually a social-media thing that fared poorly. You know, Flickr or something else that’s missing letters. But for really serious fundraisers, direct mail is still a must. I gave a social-media pre-conference for another conference yesterday and we were going through all the different types of social media, but [attendees] kept saying, “How do we get gifts online?” I said, “Well, you send them a letter.” What we want to be able to do is show flashy, new things to our board and our boss, but really successful fundraising is kind of boring. It’s executing a plan. It’s calling the donors and writing them a letter, and drafting it, and using the best practices.

When it comes to fundraising letters, there are a couple of mistakes people make. The first thing you want to do is get that high school English teacher editor out of your head. You’re not trying to get an A on this paper. You’re not writing a composition. You’re not trying to submit it for a Pulitzer Prize. Your only goal in fundraising letters, through mail, is to raise funds. It’s not to educate people on the intricacies of your cause. It’s not to do all these others things that are good communication tools. If you’re writing a fundraising letter, it’s a lot less confusing to the donor if you just keep it to raising funds.

Use a lot of white space, big fonts … if you just Google “effective fundraising letters” or “fundraising letters,” you’ll see a lot of good tips on the font styles and how to write it so donors can skim it, because all of us are reading these things over trash cans, whether we’re in the industry or not. And we need to get past the trash can and into the donor’s wallet.

AM: What are your thoughts on how to keep donors involved and do our best on fundraising?

ECC: I’m going to start off with a little appeal here.

“Dear Friend, won’t you please give HPC (highest previous contribution), HPC 1.5 or HPC 2?”

“Dear Organization X, why should I? What did you do with my HPC? What will HPC 1.5 get me? How much better will I feel if I give you HPC 2? When will you fix the problem you want me to help with? How will I make a difference? Where is my money going? Oh, and by the way, I got five letters, three e-mails, two texts and five tweets today. Why should I give to you instead of those other groups I just heard from?”

Make the case to give, to give more, to be connected, to care, to trust, to share our passion, to feel joy, to be fulfilled, to have an experience, to give. Why should a donor make a donation to your organization, and really more specifically, why should they give a larger gift than they did the last time because you know we need to upgrade?

Grab five or 10 random people at your organization tomorrow and just ask them the simple question: Why should anyone give their money to us? You may be surprised at some of the answers, but hopefully you’re going to get some really great, specific ones because your donor needs really great, specific reasons to give.

This kind of goes along with what we were talking about just now about the fundraising letter. I think everyone should sit down and read all of the fundraising communication, large and small, from the year-end appeals to the tweets and the texts that you’ve sent to your donors in the past 12 months and then ask yourself these questions:

1. Were we honest? I mean, really, the truth is bad enough. There’s never a reason to have to embellish a story or dramatize a story. The truth is dramatic. Animals need rescue. Kids are going hungry. Diseases need to be cured, or someone’s rights are being infringed upon. Policies need to be changed. Museums need to be funded. The list just goes on. And we don’t need to add a lot of superlatives to make our missions sound compelling. The story does it for us.

2. Were we direct? Did we beat around the bush, or did we plainly state what we needed and why? If you need more money and you want someone to move up to your midlevel program, don’t spend a lot of time telling them how great they are. They already know that. Tell them very specifically and very directly why you need the money. Will their bigger gift help launch a new program, or if combined with that of a hundred other people, will it help more people, places or things?

3. Were we genuine? Did the person who signed our letter sound sincere? And when you go back and read those letters, did you feel a connection? Do you think that your donors did?

4. Did we make it easy? Is it easy to understand why we need help? Is it easy to understand how the donor can make a difference? Break it down for each level. If you want someone to give $50, tell them what that would do. If you want someone to give $2,000, give them a reason for why that $2,000 is important and explain why they should do it. See if it’s easy to grasp what you want the reader to do. If you want someone to give, ask them and ask them more than once.

5. If someone gave you more money, if they took that upgrade path, did you take them out of the communications stream that got them to that gift and suddenly place them in a new one that no longer makes them feel the same way or makes them act the same way that they did when they gave the gift that got them to that level in the first place?

MP: That was awesome, Ellen. … I don’t want people to lose that because I’ve seen the power of it just last month when I was facilitating a retreat and the organization had put together profiles of donors — major givers, regular, small annual givers — and they did an entire binder, a multi-inch binder with all of the communications, printing out the e-mails,
samples of all the direct mail, the invitations to events because their leadership was saying, “We’re doing too much direct mail and overcommunicating with donors.”

They went through and looked at the different scenarios; how many touches did they get? And some of them were getting 34 or 42 touches, but when you start looking at it, it made sense because they were giving. They were also so relieved that their voice was consistent pretty much throughout and that they weren’t overcommunicating to donors. But they wouldn’t have known that if they hadn’t printed it all out and compiled it like that.

AM: That’s a great point. I want to switch a little bit to the other side of this formula, which is around the metrics and ROI. Kristin, I know you have thoughts on this.

KM: One of the things that I wanted to share with the group today to take us from the art over to the science is to look at how we measure ROI for these high-value segments. The changes that have happened in the last couple of years have created, in many cases, a less scientific approach for a lot of organizations in how often they speak to their midlevel donors and what the content of those conversations really includes. So I think it’s really time for a lot of organizations to set a new benchmark, specifically for their midlevel groups. But this really applies for everyone.

For many of the organizations we work with where they have a robust midlevel program or one that’s in rapid transition, we created seven super-KPIs (key performance indicators) that we apply to the midlevel audience. And they’re a little bit different than the campaign-based metrics. They are the scientific side to creating that binder with every single e-mail, mail piece and telephone script. This is the numbers-driven snapshot of what your program looks like.

There are, as I mentioned, seven of them. They roll the performance and cost data together, so it takes a little bit of compilation, but it is a nice way to look at your investment in these donors and what their return is, especially if you don’t have a complex and potentially expensive long-term value tool. I’m going to go through these seven really quickly. The first four are all performance-related. Remember, we’re not talking about campaign performance — we’re talking about annual performance in the program.

1. The first is response rate. Not your normal response rate, but taking all of your campaign pieces and dividing them by all of your gifts … or rather, the reverse of that. So you’re looking at the average response rate across the year.

2. The second, and this is a great yardstick, is gift per year, per segment member. It’s really the number of members that are in your segment or the number of donors that are in the segment, because you also want to include in that number donors who got treatment throughout the year but may not have made a gift. Perhaps they’ve lapsed completely to your organization.

3. The next one is annual average gift. That’s a great thermometer, and looking back in the last three to five years and seeing how that may have changed is a wonderful benchmark for you to establish your future growth opportunities. This is particularly important for programs that had changes in the frequency of their campaigns. We recently started working on one program that in 2009 had eight campaigns a year to midlevel donors. Last year they mailed 14. While they spent a lot more, the net delivered actually went down slightly.

4. The fourth is annual value per audience member. … Look at all those folks who were in your program; what was their contribution throughout the year?

The next three are related to investment and return to your org.

5. The first is your annual cost per audience member. So you’re going to add up all of the pieces that you mailed during the year, all of the e-mails that you execute, all of your annual reports and cultivation efforts and all of the things that may not necessarily be revenue-generating, and look at what the cost is per audience member.

6. The next is obviously related to that and would be your annual net per audience member.

7. Lastly, and this is very important as we are all looking so closely at our fundraising efficiency numbers and how those get reported to our donors, is looking at your annual ROI or the flip side of your ROI — your annual cost per dollar raised for donors in this program.

Those seven metrics put together are absolutely a complete snapshot of your midlevel or any high-value donor program. And if you benchmark that now and potentially even look back for the last three years, you’ll know how you can change things in the future and where you need to steer your ship to have the real growth opportunities that you’re looking for.

AM: [An attendee asks], “Some NGOs are quitting the use of direct mail due to cost. What do you think about this? I’d like to know your perspective on the metrics that you just used to help somebody who is in the situation of wondering whether direct mail is still the right channel.”

KM: The metrics that I gave specifically are helpful for midlevel, and your justification for talking to those folks shouldn’t be a very difficult argument. But it’s certainly something you can look at for your overall program, as well. …In order to keep your program going, balancing the investment that you’re going to make in acquisition with the growth, the continued opportunity and hopefully the filling of the pipeline for your major and ultimate gifts is really the way to illustrate a complete picture of the role of direct response.

I spent seven years with the American Cancer Society, and at that point, well over 90 percent of the planned gifts that came into that organization came from people whose first or early gift to the organization was through direct mail. So the long-term payoff of the origin source of direct mail is really a necessary component to having a complete picture of what the value of mail is to any organization.

AM: … There is a component of this that’s about all of us — staff, people who are working hard every day either in an agency or a nonprofit. Marc, what’s your thought on keeping our staffs where they need to be to be able to move the marble forward?

MP: I really love “The 7 Habits of Highly Effective People” — the seventh habit being sharpening the saw. [Author] Stephen Covey talks about two lumberjacks trying to cut trees. They’re in a contest. One of them kept stopping and sharpening his saw. The other one just sawed all day, and his saw got duller and duller and he had to work harder and harder and became less effective.

All too often in nonprofits, we as staff members and board and leaders get really into, “We just have to produce, produce, produce,” and we never take the time to do the metrics or the testing to see if the production is worth it.

It’s important to take the time to have a staff retreat, professional development, go to a conference or a virtual conference like this, or blogs … That’s the stuff that keeps us sharp; it helps cross-pollinate ideas. Give yourself and your staff the space to do that. I’m a real fan of prioritizing professional development and making it easy. There are all sorts of ways you can get that.

AM: A lot of times we sort of forget about that piece of the puzzle, and it’s super important. We’re going to switch to Jo right now, to get some of her ideas.

Jo Sullivan: … I spent many years with a $900-plus-million organization. Now I’m in my same sector, animal welfare, and am the executive director of an organization called Save the Chimps, and our full operating budget is $5 million. We are small, we are tiny, but we are mighty.

Some of you who are on the line are sitting in small nonprofits right now, and you know that if your monthly budget doesn’t get met, all the metrics in the world, all the fundraising advice that you get in the world isn’t going to change the fact that whatever it is you serve isn’t going to get served that month. And that is a very humbling and a very fearful place to be if you don’t have the right tools.

So I find myself in my first few months here thinking, “What are the handful of things that I could steal really, really well that the big guys do?” And the big guys have done it because they have a little more opportunity to invest and maybe make mistakes, learn and keep going. Mistakes in a small to midsized nonprofit can be a death knell, but you still have to try. You can’t not try.

So what I’ve come up with and how I’m approaching revamping everything from our website to our mass-marketing fundraising … is:

1. Think big. Think very big, and work backwards. Look at the organizations, either within your sector or others that you admire, the way they market and communicate. Look superficially. It doesn’t really matter at first. Call someone within that organization, and ask them to be a mentor. Look at a big org chart of an organization you’d like to be a part of or how you would like to see yourself grow over the years, and pull that to the areas that have the most opportunity for you. If you are uniquely situated for major gifts or you have a fantastic story that’s Web-friendly and very visual, maybe start that before you start your mass-marketing fundraising opportunities. Or convincing the board to not cut back on acquisition … it can be challenging. So get out there and see what the best practices are and how you can get the best bang for your buck. Which leads to …

2. Steal very well. We are not the first fundraisers to sit around and talk about best practices in fundraising. There are a lot of people out there who do this a lot. Just keep looking. You don’t have to sit around with a piece of notebook paper trying to figure out where the next big dollars are coming from. Find your local [Association of Fundraising Professionals] chapter; log on to free chats. Look for people in the industry you respect, and send them notes and ask them questions. Steal very, very well.

3. To Dane’s early point: If you haven’t yet built a monthly giving program … for me personally, when people talk about, “I want to build a program of monthly giving within my program,” I think, “No, it’s just a business rule. Just set your business rules. You’re going to have monthly donors; you decide if they’re going to be your first ask, your only ask or your primary ask.” When you’re small and flexible, that’s a great way to drive net income, and you can do it cheaply online.

4. Also, one of my mother’s favorite sayings, that I think absolutely applies to small nonprofits, is, “Just because you can doesn’t mean you should.” The next time someone comes to you enthusiastically to talk about the juice stands that they can have in all 50 states and you’re going to make a fortune, take a minute. Look around at what other nonprofits are doing that have successful, strong fundraising programs … are they doing juice stands around the country? If they are, go for it. But take a minute to evaluate the opportunities that are handed to you, and see where that fits within an industry that’s already got a lot best practices.

5. And then my last bit of advice: Don’t get too caught up in what your case for engagement is. So many times I’ve heard, “Oh gosh, it’s easy because there are children involved,” or, “Boy, if I just had a puppy for the envelope.” The truth of the matter is, if you believe 100 percent in what you’re doing, no matter the size of your nonprofit, you push through until you find the right message for your case for engagement, whether it’s online, major gifts or direct mail. And then you have a little bit of basis for success and can start pulling in best practices. Or maybe you’re right at the precipice and you’ve got 25,000 names on your donor list and you need to start thinking about the analytics that Kristin was talking about. All of those things apply, but if you have to start somewhere, start by looking around at what people you admire are doing, and ask how they do it.